Workers home remittances which played a key role in
developing a strong foreign exchange reserves by contributing a historic
figure of $4.2 billion during 2002-03 fiscal, showing a declining trend
during the current financial year.

Despite the remarkable growth in workers remittances
during 2002-03, the financial manager to set a realistic target of $3.6
billion for the current fiscal 2003-04, however, experts are of the view
that even that target on the lower side may hard to achieve in view of
the slow down during first half of the financial year which may not help
achieving the target at the end of the year, said financial experts.

Workers remitted $253.08 million in November compared
to 328.52 million in October a decline of 22.96 percent. In the month of
September, the remittances amounted to $318.38 million, August marked
with $280.87 million and July 307.87 million.

Out of the total of $1488 million, $24.89 million
were received through encashment and profit earned on foreign exchange
bearer certificates and foreign currency bearer certificates.

The overall picture shows that home remittances have
sharply declined during the first five months of the year falling by
$297 million to $1488 million from July to November 2003. In terms of
percentage the overall decline is estimated at 16 percent during the
period as compared with the same period last year. During the first five
months of the corresponding period last year, the workers had remitted
$1785 million while the total remittances received during the whole year
were amounted to a record $4.2 billion.

While analyzing the situation, some financial experts
attributed the current decline in home remittances to different factors
including relaxed conditions in the United States especially with
reference to the anti-money laundering campaign and scrutiny measures of
the bank deposits of the immigrants.

The fear of being questioned by the authorities, the
overseas Pakistanis had started sending their savings to Pakistan.
Although, the differential between the official and open market exchange
rate is no more attractive for the workers to use non-banking channels
to send their money, yet the banks takes much times in delivering the
remitted amount as compared to swift handling by the Hundi operators,
said market sources. Besides slow process of delivering the remitted
amount, the bank charges for dealing with home remittance services were
also discouraging factor for using the official channels by the workers,
sources said.

According to a family member of a Pakistani workers
abroad, there was a scheme of a state-owned bank that a worker willing
to send his money through bank draft can do so that the draft would be
en-cashed when presented by the family here. However, in one of such
cash, when the person went to the bank branch to en-cash the draft
carrying clear cut instructions that it can be en-cashed from any branch
of that particular bank, the branch staff declined to entertain the
customer with the excuse that they were unaware about any such scheme.
This shows that our banking system despite using huge budgets for
automation still lag in various respects of customer services.

Workers home remittances play a key role in improving
the cash flow from external resources not only in the developing
countries but also in the countries like China, Malaysia, India,
Bangladesh and other emerging economies in this region. Besides offering
reliable and speedy banking services, incentive-based policies are
required to keep up the performance of this sector.

Workers
Remittances at a Glance:

Years

Remittances(Mln $)

1990-91

1848

1991-92

1467

1992-93

1562

1993-94

1446

1994-95

1866

1995-96

1461

1996-97

1409

1997-98

1489

1998-99

1060

1999-00

984

2000-01

1087

2001-02

2389

2002-03

4300

It may be recalled that workers' remittances were
targeted at $ 2.873 billion for the 2002-03 fiscal year. During the
first eight months (July-February) the target for the whole is already
achieved. Remittances amounted to $ 2.873 billion as against $ 1.399
billion in the same period last year — thus registering an increase of
105.3 percent. With 30 percent share in total remittances, the United
States had emerged as the single largest source of cash remittances.
Remittances from the US amounted to $ 856.6 million and were up by 106.7
percent over the corresponding period of last year. Remittances from the
UAE were next in line with $ 630.7 million or 21.2 percent of the total
remittances. Remittances from the UAE were up by 106.8 percent against
the corresponding period of last year. Remittances from Saudi Arabia
stood at $ 369.4 million or 13 percent of the total and were higher by
63.4 percent.

Workers' Remittances (Million $)

Months

2002-03

2001-02

% Change

July

305.44

84.74

260.44

August

286.07

87.91

225.41

September

335.09

91.19

267.46

October

377.18

185.35

103.50

November

351.74

259.87

35.35

December

363.19

189.49

91.67

January

383.22

180.52

112.29

February

342.77

233.85

46.58

July-February

2744.70

1312.92

109.0

Total Remittances including Hajj

War Compensations (July-February)

2873.67

1399.45

105.34

Reviewing the performance of remittances last year,
one finds that they averaged $ 356 million during the first eight months
and if this trend continues, total remittances for the fiscal year
2002-03 are likely to be $ 4.3 billion-highest ever in the country's
history.

The official circles said that main factors
contributed to the sharp increase in the inflow of remittances last year
include; significant improvements in economic fundamentals, confidence
of the expatriate Pakistanis on the economic management of the country,
better exchange rate offered in the inter-bank market as against the
open market, aggressive marketing of Pakistani banks in foreign
countries and motivating the people to send their remittances through
banking channel, and crackdown on hundi/hawala system in the Middle East
and other parts of the world.